After recently implementing a series of cost-cutting measures following a decline in its second-quarter earnings—attributed to low margins and South American farmers withholding their crops in anticipation of price increases—Bunge has been steadily acquiring new companies. This past spring, it purchased Aceitera Martínez S.A., an Argentine oil producer, and in 2015, it acquired Whole Harvest Foods LLC, a refiner and packager of expeller-pressed oils. The financial details of these acquisitions have not been revealed. Bunge expects that the acquisition of IOI Loders Croklaan will expedite the growth of its value-added oil segment by expanding its product range, diversifying its manufacturing capabilities, and establishing a more robust presence in the rapidly growing Southeast Asian market. The company estimates that its revenues from food and ingredients in that region could increase to four times their current levels. Time will tell if this forecast proves accurate, but one thing is evident: the additional debt Bunge is incurring to finance its investment in IOI Loders Croklaan will significantly raise the costs of future acquisitions, whether pursued by Glencore or other interested entities.
The production of palm oil in Malaysia and Indonesia is controversial, as some companies are implicated in extensive deforestation and the burning of peatland to cultivate palm oil trees. The United Nations has identified palm oil plantations as a primary driver of environmental degradation and loss of biodiversity in Southeast Asia. Last year, Nestlé severed its relationship with IOI (the parent company of IOI Loders Croklaan) after discovering that the company’s action plan for improving its production practices was insufficient. As of July 2016, 27 companies, including Mars, Kellogg, Cargill, and Unilever, had temporarily halted palm oil sourcing from IOI until it regained compliance with the guidelines set forth by the Roundtable on Sustainable Palm Oil.
In Bunge’s announcement on September 12 regarding the IOI Loders Croklaan deal, the company emphasized that both organizations are dedicated to sustainable sourcing, which includes commitments to zero-deforestation, zero peat conversion, the protection of human rights, and ensuring traceability and transparency. Environmental organizations like the World Wildlife Fund, Greenpeace, and the Union of Concerned Scientists frequently “name and shame” prominent brands for their perceived failures in using sustainable palm oil. To bolster its reputation and improve its financial performance, Bunge has indicated a desire to avoid being included on that list while catering to its growing number of palm oil customers.
In a tangential discussion, the price of calcium citrate tablets 500mg has become a relevant topic, with consumers increasingly interested in their affordability. As Bunge navigates its expansion and sustainability efforts, the rising costs of various health supplements, including calcium citrate tablets 500mg, remind companies of the broader economic landscape that can impact both consumer behavior and corporate strategies.